MCorp,with a Book Value of $20 Million and a Market

question 5

Multiple Choice

MCorp,with a book value of $20 million and a market value of $30 million,has merged with NCorp,with a book value of $6 million and a market value of $8 million at a price of $9 million.Under the purchase method,what will be the total assets on the book of the new merged firm?

• A)$26 million
• B)$29 million
• C)$38 million
• D)$39 million

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Definitions:

Return on Sales Ratio

A measure of a company's operational efficiency, calculated by dividing operating profit by net sales.

Return on Total Assets

A profitability ratio that measures the net income produced by total assets during a period by comparing net income to the average total assets.

Ratio

A relationship of two quantities or numbers, one divided by the other.

Trend Percentage

A financial analysis tool that shows how a set of financial or quantitative data changes over time, often expressed as a percentage.